Luxury brands must increasingly contend with gray market sites, which lure shoppers away from official brand destinations by providing deeper discounts and employing smarter e-commerce practices. However, L2’s Watches: Gray Market report identifies several ways that brands can compete – a valuable lesson not only for watchmakers, but for all companies threatened by the growing gray market.
The study recommends that brands increase paid search investments and optimize their sites for organic search, two moves that can promote awareness and boost site traffic and conversions. Many Watch brands neglect to make basic investments in SEM, opening the door for gray market sites to dominate. On branded search terms like “omega,” the study finds that the gray market owns 59% of first-page paid results, while brand sites own just 16%.
Brands fare no better on searches that include a model term (for example, “Omega Speedmaster”), which are particularly crucial for conversions. By bidding aggressively on specific makes and models, gray market sites divert consumers looking for those products from brand sites where they might otherwise make a purchase.
The study also makes clear that Watch brands should provide more information online, especially pricing. Many sites in the study fail to include basic product information, and 44% of brands do not list prices online. Without more transparency, consumers will likely continue turning to gray market alternatives.
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